GIS now testing a key price level ahead of earnings

The first quarter of 2019 has been a positive one for General Mills Inc (GIS) which has seen the price of the stock rally from the low of $36.42 of last December, to currently trade at $47.39 at the time of writing, and the question now is whether this bullish sentiment will continue into Q2.

And from a technical perspective, we are now at a delicate point for this stock as we are once again approaching a strong region of price resistance which was the catalyst for the bearish trend of late 2018. This level is denoted with the red dashed line of the accumulation and distribution indicator which considers price-based support and resistance, rather than volume as on the VPOC indicator. The thickness of the line indicates this is a strong region, that gains strength each time it is tested from below, which has been the case over the last two weeks and was tested again at the end of last week.

The reason this level is so important is two-fold. First it is a strong area, and second, if the stock price does breach it, then above we have a low volume node on the volume point of control through which the price should rise quickly, and on towards minor price resistance at $50.

The catalyst for such a move may well come this week with earnings due for release on the 20th March before the opening bell, with the forecast EPS being $0.69 compared to the same quarter last year at $0.79. Provided earnings come in at or better than expected, we should see the price break above the $48 price, which in turn will then create an excellent platform of support for a further move higher in due course, through $50 and on towards $52. Volumes remain supportive of a move higher, with the trend monitor also confirming the current bullish sentiment.

Charts from NinjaTrader and indicators from Quantum Trading